Renewable Energy Group Inc. (REG) announced that it has signed an asset purchase agreement to acquire a 20 million gal. nameplate capacity biodiesel refinery located in DeForest, Wis., from Sanimax Energy LLC.

Sanimax is a privately owned rendering company operating from 16 locations in Canada and U.S.

Renewable Energy Group is adding a 20 million gal. Sanimax biodiesel plant in Wisconsin to its growing fleet of lower-cost, lower-carbon biorefineries. Photo: REG.

Under the asset purchase agreement, REG will pay Sanimax approximately $11 million in cash and will issue 500,000 shares of REG common stock in exchange for the biorefinery and related assets. REG will also pay Sanimax up to an additional $5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be renamed REG Madison LLC.

Sanimax operates a grease processing facility at the same location, but that facility is not part of the acquisition. The transaction is subject to customary closing conditions.

“With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well,” said Daniel J. Oh, REG president and chief executive officer. “This plant will add to our network of lower-cost, lower-carbon intensity, multi-feedstock biorefineries. Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages. We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship.”

“This agreement is in line with our business plan to improve focus on our core businesses,” said Martin Couture, Sanimax president and CEO. “We are pleased that our biodiesel employees will have an opportunity to pursue their career with an industry leader. ... Sanimax looks forward to continuing its excellent business relationship with REG as a shareholder and a reliable feedstock supplier.”

The biorefinery, located just north of Madison, Wis., began production in 2007. Using the same REG patented high-free fatty acid processing technology as the company's Seneca, Ill., plant, it produces biodiesel from lower-cost feedstocks, including yellow grease, rendered animal fats and inedible corn oil, in addition to refined vegetable oils. The facility has both truck and rail capabilities.

REG, a leading North American advanced biofuel producer and developer of renewable chemicals, converts natural fats, oils and greases into advanced biofuels and converts diverse feedstocks into renewable chemicals.

Upon closing of the transaction, REG will have a combined nameplate production capacity of 452 million gal. from 11 active North American biomass-based diesel refineries in seven states: three in Iowa, two in Illinois, two in Texas and one each in Louisiana, Minnesota, Washington and Wisconsin.

Sanimax offers environmental solutions, services and products to the agri-food industry, covering the collection, processing and enhancement of organic byproducts.